Subrogation is a term that's understood in insurance and legal circles but rarely by the people who hire them. Rather than leave it to the professionals, it is in your self-interest to comprehend the steps of the process. The more you know about it, the more likely relevant proceedings will work out favorably.

Any insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in a timely manner. If your home burns down, for example, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.

But since ascertaining who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting often increases the damage to the policyholder – insurance companies often opt to pay up front and assign blame later. They then need a means to recover the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.

Let's Look at an Example

You are in a vehicle accident. Another car crashed into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was entirely to blame and her insurance policy should have paid for the repair of your auto. How does your insurance company get its funds back?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.

Why Should I Care?

For starters, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, based on the laws in most states.

Additionally, if the total loss of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as probate attorney paddock lake wi, successfully press a subrogation case, it will recover your costs as well as its own.

All insurance companies are not created equal. When comparing, it's worth examining the reputations of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.